UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.    )
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Definitive Proxy Statement
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Soliciting Material Pursuant to §240.14a-12
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MASIMO CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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ABOUT MASIMO


About Masimo                                        
Improve patient outcomes and reduce the cost of care
________

Masimo Corporation is a global medical technology company that develops, manufactures and markets a variety of noninvasive patient monitoring technologies. Our mission is to improve patient outcomes and reduce the cost of care. Our patient monitoring solutions generally incorporate a monitor or circuit board, proprietary single-patient use or reusable sensors, software and/or cables. We primarily sell our products to hospitals, emergency medical service providers, home care providers, physician offices, veterinarians, long-term care facilities and consumers through our direct sales force, distributors and original equipment manufacturer partners. Our core business is Measure-through Motion and Low Perfusion pulse oximetry, known as Masimo Signal Extraction Technology® (SET®). Our technology portfolio has expanded significantly over the years to include noninvasive monitoring of blood constituents, regional oximetry monitoring, brain function monitoring, acoustic respiration monitoring, capnography and gas monitoring, remote patient surveillance and monitoring, hospital automation and connectivity solutions.
Global Reach

Masimo is committed to improving patient care globally, with over 1,600 full-time employees and 3,700 dedicated contract personnel worldwide and operations in over 150 countries stretching across North America, Europe, Latin America, the Middle East, Asia and Australia.
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MASIMO CORPORATION
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Dear Fellow Stockholder:

Our 2020 Annual Meeting of Stockholders (the “Annual Meeting”), or any adjournment or postponement thereof, will be held on Friday May 29, 2020, at 2:00 p.m. Pacific Time at our principal executive offices in Irvine, California. Information concerning the matters to be considered and voted upon at the 2020 Annual Meeting is set out in the attached Notice of Annual Meeting of Stockholders and Proxy Statement.

This meeting is your opportunity to hear directly from executive management about Masimo’s 2019 performance and our expectations for the future. Masimo was established in 1989 with the singular goal of creating noninvasive technology to solve the unsolvable. In 2019, we celebrated our 30th anniversary. As we pause to reflect on our monumental accomplishments of the past, we look forward to a tremendously bright future ahead.

For Masimo, 2019 was another year of broad growth and adoption of our noninvasive technologies. Our global organization continued to execute on our strategy to deliver above-market growth and drive operational efficiencies throughout the business. Our product revenues increased 12.8% to $936.4 million, or 13.6% growth on a constant currency basis1, and we shipped a record number of noninvasive technology boards and monitors (excluding handheld and finger oximeters). In addition, we delivered significant operating margin improvements and earnings per share (“EPS”) growth that exceeded expectations.

Our strong performance in 2019 demonstrates the significant progress we are making to drive operational efficiencies throughout the business and take further steps towards achieving our long-term goal of 30% operating margins. Most importantly, we are making this progress on the profitability front while at the same time increasing our research and development investment as we continue to deliver innovative technologies to the marketplace.

Regardless of the number of shares you hold or whether you plan to attend the Annual Meeting, you are encouraged to make sure that your shares are represented at the Annual Meeting. Accordingly, please authorize a proxy to vote your shares as soon as possible in accordance with the instructions you received. This will not prevent you from voting your shares in person if you hold your shares in record name or have a valid proxy and subsequently choose to attend the Annual Meeting.

I hope you will be able to join us. We look forward to your continued support.



“Improve Patient Outcomes and Reduce the Cost of Care ”
 
 
Joe Kiani
Chairman and Chief Executive Officer


____________
1 
Constant currency product revenue and non-GAAP EPS are non-GAAP financial measures - please see Appendix A to this Proxy Statement for a description of the adjustments and a reconciliation to the corresponding GAAP financial measure.



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NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS
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Date
 
Items of Business:
 
 
 
Friday, May 29, 2020
 
1. To elect two Class I Directors as named in our Proxy Statement;
 
 
 
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Time
 
2. To ratify the selection of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending January 2, 2021;
2:00 p.m. local time
 
 
 
 
3. To provide an advisory vote to approve the compensation of our named executive officers;
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Place*
 
Masimo Corporation Headquarters
 
4. To approve an amendment to our 2017 Equity Incentive Plan;
 
52 Discovery, Irvine, California 92618
 
5. To approve an amendment to our Executive Bonus Incentive Plan; and
 
 
 
6. To conduct any other business properly brought before the Annual Meeting and adjournment or postponement thereof.
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Record Date
 
March 30, 2020
 
(These items of business are more fully described in the Proxy Statement accompanying this Notice.)
 
 
 
 
 
 
 
 
Shape the Future of Masimo by Voting Now
 
Only stockholders of record at the close of business on March 30, 2020 may vote at the Annual Meeting or any adjournment or postponement thereof.

On or about April 20, 2020, we expect to mail our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access our proxy statement and our annual report. The Notice provides instructions on how to vote via the internet or by telephone and includes instructions on how to receive a paper copy of our proxy materials by mail. The accompanying proxy statement and our annual report can be accessed directly at www.envisionreports.com/masi
 
 
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Via Internet
 
Visit www.envisionreports.com/masi
 
 
 
 
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Via Phone
 
 
 
 
 
Dial the toll-free telephone number listed on your proxy card under the heading “vote by telephone”
 
 
 
 
 
 
By Order of the Board of Directors
 
 
/s/ JOE KIANI
 
 
 
 
 
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Via Mail
 
Chairman & Chief Executive Officer
 
Using the enclosed proxy card, complete, sign and date your proxy card and return it promptly in the envelope provided.
 
Irvine, California
 
 
 
 
April 15, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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In Person
 
* We are actively monitoring COVID-19 developments and related public health concerns and are developing contingency plans in the event any changes to the date, time or location of the Annual Meeting are deemed necessary or appropriate. The health and well-being of our employees and stockholders are important. If we determine to make any change in the date, time or location, or to hold the Annual Meeting virtually by remote communication, an announcement of such changes will be made through a press release and posting details at www.envisionreports.com/masi and/or www.masimo.com that will also be filed with the SEC as proxy material. Please check www.envisionreports.com/masi and/or www.masimo.com in advance of the date of the Annual Meeting if you are planning to attend in person. As always, we encourage you to vote your shares prior to the Annual Meeting.
You may attend the Annual Meeting and vote your shares in person.
 
 
If you vote by proxy, your vote must be received by 11:00 p.m. Pacific Time on May 28, 2020 to be counted.
 
 



TABLE OF CONTENTS
n
NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS
n
PROXY STATEMENT SUMMARY
n
OUR EXECUTIVE OFFICERS
n
OUR BOARD OF DIRECTORS
n
CORPORATE GOVERNANCE AND BOARD MATTERS
 
¡
Corporate Governance Guidelines
 
¡
Consideration of Director Nominees
 
¡
Board Leadership Structure
 
¡
Board’s Role in Risk Oversight
 
¡
Investor Feedback and Engagement
 
¡
Corporate Social Citizenship & Responsibility
 
¡
Charitable Outreach
 
¡
Adoption of Proxy Access
 
¡
Meetings and Executive Sessions
 
¡
Policy Regarding Board Member Attendance at Annual Meetings
 
¡
Independence of the Board of Directors
 
¡
Code of Business Conduct and Ethics
 
¡
Stockholder Communications with the Board of Directors
 
¡
Information Regarding Board Committees
 
¡
Non-Employee Director Compensation
n
AUDIT COMMITTEE MATTERS
 
¡
Audit Committee’s Pre-Approval Policies and Procedures
 
¡
Principal Accountant Fees and Services
 
¡
Audit Committee Report
 
 
 
 



TABLE OF CONTENTS - CONTINUED
n
EXECUTIVE COMPENSATION
 
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Compensation Discussion and Analysis
 
¡
Compensation Committee Report
 
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Compensation Committee Interlocks and Insider Participation
 
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Summary Compensation Table
 
¡
Grants of Plan-Based Awards During Fiscal Year 2019
 
¡
Outstanding Equity Awards on December 28, 2019
 
¡
Option Exercises and Stock Vested During Fiscal Year 2019
 
¡
Employment Arrangements with Named Executive Officers
 
¡
Pay Ratio Disclosure
n
OWNERSHIP OF OUR STOCK
 
¡
Security Ownership of Certain Beneficial Owners and Management
 
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Securities Authorized for Issuance
 
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Stock Ownership Policy
 
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Non-Employee Director Stock Ownership Policy
n
ADDITIONAL INFORMATION
 
¡
PROPOSAL 1: Election of Directors
 
¡
PROPOSAL 2: Ratification of Selection of Independent Registered Public Accounting Firm
 
¡
PROPOSAL 3: Advisory Vote to Approve the Compensation of Our Named Executive Officers
 
¡
PROPOSAL 4: Approval of an Amendment to our 2017 Equity Incentive Plan
 
Á
PROPOSAL 5: Approval of an Amendment to our Executive Bonus Incentive Plan
 
¡
Transactions with Related Persons, Promoters and Certain Control Persons
 
¡
Questions and Answers You May Have About These Proxy Materials and Voting
 
¡
Householding
 
¡
Annual Report on Form 10-K
 
¡
Important Notice Regarding Availability of Proxy Materials for Stockholders Meeting to be Held on May 29, 2020
 
¡
Other Matters



TABLE OF CONTENTS - CONTINUED
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APPENDIX A
A-1
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APPENDIX B
B-1
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APPENDIX C
C-1
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APPENDIX D
D-1



YOUR VOTE IS IMPORTANT
You are cordially invited to attend the meeting. Whether or not you expect to attend the meeting, please complete, date and sign and return the enclosed proxy or submit your proxy through the internet or by telephone as promptly as possible in order to ensure your representation at the meeting. If you choose to submit your proxy by mail, a return envelope (which is postage prepaid if mailed in the United States) is enclosed for your convenience. Even if you have voted by proxy, you may still vote in person if you attend the meeting. Please note, however, that if your shares are held of record by a broker, bank or other agent and you wish to vote at the meeting, you must obtain a proxy issued in your name from that record holder.
The Notice of Internet Availability of Proxy Materials containing instructions on how to access this Proxy Statement and our annual report is first being mailed on or about April 20, 2020 to all stockholders entitled to receive notice of and to vote at the Annual Meeting.
SPECIAL NOTE ON FORWARD LOOKING INFORMATION
This Proxy Statement contains “forward-looking statements” that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially and adversely from those expressed or implied by such forward-looking statements. These statements are often identified by the use of words such as “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “intend”, “may”, “ongoing”, “opportunity”, “plan”, “potential”, “predicts”, “seek”, “should”, “will” or “would”, and similar expressions and variations or negatives of these words. These forward-looking statements are based on the expectations, estimates, projections, beliefs and assumptions of our management based on information currently available to management, all of which is subject to change. Such forward-looking statements are subject to risks, uncertainties and other factors that are difficult to predict and could cause our actual results and the timing of certain events to differ materially and adversely from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed under Item 1A-“Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 28, 2019, as filed with the Securities and Exchange Commission on February 19, 2020. Furthermore, such forward-looking statements speak only as of the date of this Proxy Statement. We undertake no obligation to update or revise publicly any forward-looking statements to reflect events or circumstances after the date of such statements for any reason, except as required by law.





 
PROXY STATEMENT SUMMARY


PROXY STATEMENT SUMMARY
 
The Annual Meeting and this Proxy Statement provide an important opportunity for us to communicate with you about the achievements of the past year and the leadership of Masimo. As you consider your vote, we ask that you carefully review the information in this Proxy Statement, which includes an overview of our business and summarizes key aspects of our performance, executive compensation and corporate governance.
The following summary highlights certain information contained elsewhere in this Proxy Statement. This summary does not contain all the information that you should consider, and you should read the entire Proxy Statement carefully before voting.
DATE AND TIME
 
VOTING MATTERS
See Page
Board Recommendation
Friday, May 29, 2020, 2:00 p.m. PST
 
PROPOSAL 1
To elect two Class I Directors as named in our Proxy Statement
Page 93
FOR each
 
 
 
 
 
 
LOCATION
 
PROPOSAL 2
To ratify the selection of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending January 2, 2021
Page 95
FOR
Masimo Offices
52 Discovery Irvine, California 92618


 
 
 
 
 
 
 
PROPOSAL 3
To provide an advisory vote to approve the compensation of our named executive officers
Page 96
FOR
 
 
RECORD DATE
 
March 30, 2020
 
 
 
 
 
 
 
PROPOSAL 4
To approve an amendment to our 2017 Equity Incentive Plan
Page 97
FOR
 
 
 
 
 
 
 
 
PROPOSAL 5
To approve an amendment to our Executive Bonus Incentive Plan
Page 109
FOR
2019 Business Highlights
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Stockholder Value & Return
Total Stockholder Return
Year-End 2019
1-YEAR
3-YEAR
 
5-YEAR
47.2%
134.5%
 
500.0%
 
 
 
Top Quartile*
 
Above Median*
____________
1 
Non-GAAP financial measure - please see Appendix A to this Proxy Statement for a description of the adjustments and a reconciliation to the corresponding GAAP financial measure.
*
Represents comparison with our 2019 Proxy Statement peer group.

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PROXY STATEMENT SUMMARY


In 2019, we experienced strong momentum in our business. Our global organization continued to execute on our strategy to deliver above-market growth and drive operational efficiencies throughout the business with the goal of delivering significant operating margin improvements and earnings per share (“EPS”) growth that exceeded expectations.
Our strong performance in 2019 demonstrates the significant progress we are making to drive operational efficiencies throughout the business in order to achieve our long-term goal of 30% operating margins. Most importantly, we are making this progress on the profitability front while at the same time increasing our research and development investment, increasing our strategic investments, improving the growth profile of the overall business and continuing to deliver innovative technologies to the marketplace.
Some of our notable fiscal 2019 financial and operational highlights include the following GAAP and non-GAAP measures:
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l Total revenues, including royalties and other revenue of $937.8 million, which significantly exceeded our original fiscal 2019 financial guidance of $912.0 million.
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l Product revenue increased 12.8% to $936.4 million, or 13.6% on a constant currency basis1, which significantly exceeded our original fiscal 2019 financial guidance of $912.0 million.
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l Shipments of noninvasive technology boards and monitors increased 6.3% to 246,200.
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l GAAP operating margin was 23.6%.
l Non-GAAP operating margin1 was 24.0%.
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l GAAP EPS was $3.44.
l Non-GAAP EPS1 was $3.22.
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l Free cash flow was $153.3 million.




















____________
1
Non-GAAP financial measure - please see Appendix A to this Proxy Statement for a description of the adjustments and a reconciliation to the corresponding GAAP financial measure.

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PROXY STATEMENT SUMMARY


Executive Compensation Highlights
Masimo’s executive compensation programs are designed to align the interests of Masimo’s executive officers with those of its stockholders, attract and retain highly-talented individuals and support our long-term growth and profitability goals. Our compensation programs provide a mix of fixed, variable and long-term incentive compensation elements that are closely aligned with company performance and are sensitive to our stock performance, including the following:
Type
 
Component
 
Objective
Fixed compensation
 
Base salary
 
l
Fixed portion of annual cash compensation
 
 
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l
Attract and retain talent
 
 
 
l
Motivate strong business performance without encouraging excessive risk-taking
 
 
 
 
 
 
 
 
 
 
Performance-based
Compensation
 
Annual incentive
 
l
Variable, earned amounts paid annually
 
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l
Drive the achievement of key business results on an annual or multi-year basis
 
 
 
l
Recognize individuals based on their contributions
 
 
 
l
Performance-based and not guaranteed
 
 
 
 
 
 
 
 
 
 
 
 
Long-term incentives
 
l
Variable, equity-based:
 
 
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l  25% in the form of stock options that vest annually over a five year period; and
 
 
 
 
l  75% in the form of performance share units (“PSUs”) that vest after three years based on our actual performance as measured against multiple pre-established performance objectives at the end of the performance period.
 
 
 
 
l
Reinforce the need for long-term sustained performance and business growth
 
 
 
 
l
Focus executives on annual objectives that support the long-term business strategy and creation of stockholder value
 
 
 
 
l
Align the long-term interests of executives and stockholders
 
 
 
 
l
Balance cash payments with equity ownership
 
 
 
 
l
Encourage retention


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PROXY STATEMENT SUMMARY


Total Target Compensation
Masimo’s “at-risk” compensation (which includes the annual cash bonus and long-term incentive compensation) comprised 92.4% of our Chief Executive Officer (“CEO”)’s compensation and an average of 81.9% of the compensation of our other Named Executive Officers’ (“NEOs”) fiscal 2019 total target compensation, as seen below:
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Total long-term incentive compensation =
84.6%
 
Total long-term incentive compensation =
72.8%
 
Total “at-risk” compensation =
92.3%
 
Total “at-risk” compensation =
81.9%
 
    
Our compensation philosophy and structure has continued to evolve, based on changing market conditions, input from our Compensation Committee’s independent compensation consultant and direct feedback from our stockholders. The Compensation Committee believes that the current LTI equity award structure focuses our NEOs on driving increased stockholder value over a multi-year period and enables us to achieve our retention objectives, while maintaining a conservative approach to overall share usage.

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PROXY STATEMENT SUMMARY


Compensation Policies and Practices at a Glance
 
þ
 
 
ý
 
What We Do
 
 
What We Don’t Do
þ
Maintain an Independent Compensation Committee
 
ý
No Guaranteed Bonuses
þ
Compensation Committee Retains an Independent Compensation Advisor
 
ý
No Special Executive Retirement Plans
þ
Annual Executive Compensation Review
 
ý
No Hedging; Pledging Requires Pre-Approval
þ
Compensation At-Risk - Pay For Performance
 
ý
No Tax Payments on Perquisites
þ
Annual Compensation-Related Risk Assessment
 
ý
No Tax Gross-Up Payments on Post-Employment Compensation Arrangements
þ
Multi-Year Vesting Requirements
 
ý
No Stock Option Re-pricing
þ
Compensation Recovery (“Clawback”) Policy
 
ý
No Evergreen Provision
þ
Stock Ownership Policies
 
 
 
þ
Annual Stockholder Advisory Vote on Named Executive Officer Compensation
 
 
 
þ
Stockholder Engagement that Includes our Compensation Committee Chairperson
 
 
 
 
Stockholder Advisory Vote (“Say-On-Pay Vote”)
 
 
 
In 2019, stockholders continued their support for our fiscal 2018 executive compensation programs with approximately 85% approval of the stockholder advisory votes. Consistent with the Company’s strong interest in stockholder engagement and our pay-for-performance approach, the Compensation Committee continues to review our executive compensation program to ensure alignment between the respective interests of our executives and stockholders. No significant changes were made for fiscal 2019.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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PROXY STATEMENT SUMMARY


Director Snapshot
Our directors possess broad expertise, skills, experience and perspectives that facilitate the strong oversight and strategic directions required to govern Masimo’s business and strengthen and support the executive management team. As shown in the following charts, our Board of Directors (“Board”) is comprised of individuals with expertise in fields that align with Masimo’s business and long-term strategy, and reflects a blend of tenure that allows for new perspectives and continuity.

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Skills and Experience
Skills/Experience
 Number of Directors With Relevant Skills/Experience
CEO & Board Leadership
llllllll
Financial Expertise
llllllll
Government/Public Policy
llllllll
Academics/Science
llllllll
Healthcare Industry
llllllll
Medical Device Operations
llllllll
International
llllllll
Diversity
llllllll
 
 
 
 
Our Nominating, Compliance and Corporate Governance Committee is responsible for identifying and recommending director candidates to our Board for nomination. The Nominating, Compliance and Corporate Governance Committee reviews candidates for director nominees in the context of the current composition of our Board and committees, our operating requirements and the long-term interests of our stockholders. In conducting this assessment, the Nominating, Compliance and Corporate Governance Committee may consider the director nominee’s qualifications, diversity, skills and such other factors as it deems appropriate given the current needs of our Board, the committees and Masimo, to maintain a balance of knowledge, experience, diversity and capability.


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PROXY STATEMENT SUMMARY


Corporate Governance Highlights
The Board believes strong corporate governance is critical to achieving our long-term goals and maintaining the trust and confidence of investors, employees, customers, regulatory agencies and other stakeholders. The following are highlights of our Corporate Governance Program:
Board Independence
 
Board Effectiveness
þ
All but one of our non-employee directors are independent(1)
 
þ
All directors attended more than 75% of the Board and their committee meetings
þ
Maintain an independent Compensation Committee
 
þ
Commitment to Board refreshment with 5 new independent directors since 2014
þ
Compensation Committee retains an independent compensation advisor
 
þ
Diverse Board with mix of skills, tenure and age
 
 
 
þ
Director nominee selection process aligned with our long-term strategic plans
 
 
 
 
 
 
 
Best Practices
 
Stockholder Rights
þ
Stock ownership policy for executive and Board members
 
þ
Annual stockholder advisory vote on named executive officer compensation
þ
Annual compensation-related risk assessment
 
þ
Stockholder engagement that includes our Compensation Committee Chairperson
þ
Annual executive compensation review
 
þ
Stockholders have proxy access with market standard conditions for director nominations
þ
Compensation recovery (“Clawback”) policy
 
þ
No stockholder rights plan (“poison pill”)
þ
No hedging; pledging requires pre-approval
 
 
 
_______________
(1) 
Dr. Barker, who receives compensation from us for consulting services as our Chief Science Officer and Chairman of our Scientific Advisory Board, is our only non-employee director who is not independent.



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EXECUTIVE OFFICERS


EXECUTIVE OFFICERS
Our executive officers are appointed by and serve at the discretion of our Board. Our executive officers, their ages, respective positions and biographies are listed below:
Name
 
Age(1)
 
Position(s)
Joe Kiani
 
55
 
Chief Executive Officer & Chairman of the Board
Micah Young
 
41
 
Executive Vice President, Chief Financial Officer
Bilal Muhsin
 
39
 
Chief Operating Officer
Jon Coleman
 
56
 
President, Worldwide Sales, Professional Services & Medical Affairs
Yongsam Lee
 
55
 
Executive Vice President, Chief Information Officer
Tao Levy
 
46
 
Executive Vice President, Business Development
Tom McClenahan
 
47
 
Executive Vice President, General Counsel & Corporate Secretary
Anand Sampath
 
53
 
Executive Vice President, Operations & Clinical Research
____________
(1) 
As of April 15, 2020.
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Joe Kiani
Chief Executive Officer & Chairman of the Board
Employee Since: 1989
Joe Kiani is the founder of Masimo and has served as Chief Executive Officer (“CEO”) & Chairman of the Board since our inception in 1989. He is an inventor on more than 100 patents related to signal processing, sensors and patient monitoring, including patents for the invention of Measure-through motion and low-perfusion pulse oximetry. Since September 2016, Mr. Kiani has served on the Board of Directors of Stereotaxis, Inc. (NYSE:STXS), a manufacturer of robotic cardiology instrument navigation systems. Mr. Kiani holds a B.S.E.E. and an M.S.E.E. from San Diego State University. In addition to Mr. Kiani’s role at Masimo, he is also the Chairman of the Masimo Foundation for Ethics, Innovation and Competition in Healthcare, and the Chairman and CEO of Cercacor Laboratories, Inc. Mr. Kiani also serves on a number of other Boards of Directors, including CHOC Children’s Orange/CHOC Children’s at Mission Hospital, Bioniz Therapeutics, Inc., the Patient Safety Movement Foundation, the Medical Device Manufacturers Association and SMSbiotech, Inc. As Masimo’s founder, Chief Executive Officer and Chairman of the Board since our formation in 1989, Mr. Kiani has the deepest understanding of Masimo, our history, our culture and our technology. He has broad experience in a wide range of functional areas, including strategic planning, strategic investments, engineering and development, and legal and governmental affairs. Our Nominating, Compliance and Corporate Governance Committee believes Mr. Kiani is critical to our continued development and growth.

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EXECUTIVE OFFICERS


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Micah Young
Executive Vice President, Chief Financial Officer
Employee Since: 2017
Micah Young has served as our Executive Vice President, Chief Financial Officer (“CFO”) since October 2017. From July 2012 to September 2017, Mr. Young served as Vice President, Finance, at NuVasive, Inc. (Nasdaq: NUVA), a medical device company focused on the design, development and marketing of products for the surgical treatment of spine disorders. Prior to that time, he served as NuVasive, Inc.’s Senior Director, Finance, Global Operations, from December 2009 to July 2012. From 2002 to 2009, Mr. Young held various accounting and finance positions with Zimmer Holdings, Inc., a company focused on the design, development, manufacture and marketing of orthopedic reconstructive, spinal and trauma devices, dental implants and related surgical products. Prior to his time at Zimmer Holdings, Inc., Mr. Young was an accountant at Deloitte & Touche LLP from 2000 to 2002. He holds a Bachelor of Science, Accounting and Criminal Justice from Indiana Wesleyan University and is a Certified Public Accountant (inactive).
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Bilal Muhsin
Chief Operating Officer
Employee Since: 2000
Bilal Muhsin has served as our Chief Operating Officer since May 2019. Prior to this, Mr. Muhsin served as Executive Vice President, Engineering, Marketing and Regulatory Affairs from March 2018 to May 2019. Prior to March 2018, Mr. Muhsin, held various other roles including Executive Vice President, Engineering; Vice President, Engineering, Instruments and Systems; Director and Manager level positions within Masimo since June 2000. Mr. Muhsin’s technical, product and overall leadership skills have helped Masimo bring revolutionary new products to the marketplace, including Masimo’s Patient Safety Net, Radical-7®, Root and various significant software products. Mr. Muhsin holds a B.S. in Computer Science from San Diego State University.
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Jon Coleman
President, Worldwide Sales, Professional Services & Medical Affairs
Employee Since: 2008
Jon Coleman has served as our President, Worldwide Sales, Professional Services & Medical Affairs since February 2011, and was our President, International from August 2008 to February 2011. From October 2007 to August 2008, Mr. Coleman was President and Chief Executive Officer of You Take Control, Inc., a healthcare information technology start-up company. He served as General Manager, Americas of Targus Group International, a supplier of mobile computing cases and accessories, from March 2006 to February 2007. From March 1994 to February 2006, he held progressive leadership positions with Pfizer, Inc., ultimately as its as Vice President and General Manager, Canada & Caribbean Region. Mr. Coleman holds a M.B.A. from Harvard Business School, and a B.A. in International Relations from Brigham Young University.

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EXECUTIVE OFFICERS


YLEEA01.JPG
Yongsam Lee
Executive Vice President, Chief Information Officer
Employee Since: 1996
Yongsam Lee has served as our Executive Vice President, Chief Information Officer since August 2014. From March 1996 to October 2001 and from April 2002 to August 2014, Mr. Lee held various positions with us, including Vice President, IT, Chief Information Officer, Executive Vice President, Operations, Executive Vice President, Regulatory Affairs & Chief Information Officer. From October 2001 to April 2002, he served as Director of IT at SMC Networks, Inc., a provider of networking solutions. Mr. Lee holds a B.S. in Applied Physics from the University of California, Irvine.
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Tao Levy
Executive Vice President, Business Development
Employee Since: 2018
Tao Levy has served as our Executive Vice President, Business Development since January 2018. From March 2013 to December 2017, Mr. Levy served as Managing Director, Medical Devices Equity Research, at Wedbush Securities. Prior to that time, he served as Senior Analyst, Medical Devices Equity Research at Loewen Ondaatje McCutcheon, from August 2012 to March 2013. From September 2010 to February 2012, Mr. Levy was Managing Director, Medical Devices Equity Research at Collins Stewart. Prior to his time at Collins Stewart, Mr. Levy was Director, Medical Devices Equity Research at Deutsche Bank where he served from 2002 to 2010. He holds a Bachelor of Arts in Biology from the University of Pennsylvania.
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Tom McClenahan
Executive Vice President, General Counsel & Corporate Secretary
Employee Since: 2011
Tom McClenahan has served as our Executive Vice President & General Counsel since April 2013 and as our Corporate Secretary since August 2014. From April 2011 to April 2013, Mr. McClenahan was our Vice President and Assistant General Counsel. From November 2002 to April 2011, he was an associate and then principal with the law firm of Fish & Richardson. From September 1999 to November 2002, he was an associate with the law firm of Knobbe, Martens, Olson & Bear. Mr. McClenahan holds a B.S. in Mechanical Engineering from Iowa State University and a J.D. from the University of Minnesota Law School.
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Anand Sampath
Executive Vice President, Operations & Clinical Research
Employee Since: 2006
Anand Sampath has served as our Executive Vice President, Operations & Clinical Research since May 2019. Prior to that he served as Chief Operating Officer from August 2014 to May 2019. Prior to that, he served as Executive Vice President, Engineering since March 2007. From April 2006 to March 2007, Mr. Sampath was our Director of Systems Engineering. From October 1995 to March 2006, he held various positions, including Program Manager, Engineering Manager and Distinguished Member of Technical Staff, at Motorola, Inc. Mr. Sampath is an inventor on more than ten patents relating to patient monitoring, wireless networks and communications. He holds a B.S. in Engineering from Bangalore University.
There are no family relationships between or among any of our executive officers or directors.

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OUR BOARD OF DIRECTORS

BOARD OF DIRECTORS
Our Board presently has eight members and is divided into three classes, designated Class I, Class II and Class III. Each class currently consists of at least two directors and has a three-year term. Class I, Class II and Class III directors currently have a remaining term of office until the 2020, 2021 and 2022 Annual Meeting of Stockholders, respectively. Vacancies on the Board may be filled only by persons elected by a majority of the remaining directors in office (even though the remaining directors may constitute less than a quorum). A director elected by our Board to fill a vacancy in a Class, including a vacancy created by an increase in the number of directors, will serve for the earlier of the remainder of the full term of that Class, until the director’s successor is elected and qualified or until the director’s death, resignation or removal.
The names of our current directors, their ages, director class and position(s) are listed below.
Name
 
Age(1)
 
Director Class
 
Term Expires
 
Position(s)
Steven J. Barker, M.D., Ph.D.
 
75
 
Class I
 
2020(2)
 
Director
H Michael Cohen
 
54
 
Class I
 
2020
 
Director
Sanford Fitch
 
79
 
Class I
 
2020(2)
 
Director
Thomas Harkin
 
80
 
Class II
 
2022
 
Director
Joe Kiani(3)
 
55
 
Class II
 
2021
 
Chief Executive Officer & Chairman of the Board
Adam Mikkelson
 
41
 
Class III
 
2022
 
Director
Craig Reynolds
 
71
 
Class III
 
2022
 
Director
Julie A. Shimer, Ph.D.
 
67
 
Class I
 
2020
 
Director
______________
(1) 
As of April 15, 2020.
(2) 
Dr. Barker’s and Mr. Fitch’s service on the Board will cease when their current terms expire at the Annual Meeting.     
(3) 
Please see “Executive Officers” on page 17 of this Proxy Statement for Mr. Kiani’s biography.

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OUR BOARD OF DIRECTORS

DIRECTOR SKILLS MATRIX
 
 
 
 
 
Director Nominee Skills and Experience
DIRECTORSKILLSMATRIXV3.JPG
CEO & Board Leadership
CEO and board leadership experience brings skills that help our Board to capably advise, support, and oversee our executive management team, and our strategy to drive long-term value.
 
 
 
 
ü
 
ü
ü
Financial expertise
Financial expertise assists our Board in overseeing our financial statements, capital structure and internal controls.
 
ü
ü
 
 
ü
 
ü
Government/Public Policy
Government and public policy expertise offer us insight into the governmental/regulatory environment of the many jurisdictions in which we operate, their legislative and administrative priorities, and the potential implications of our business.
 
 
 
ü
 
 
 
 
Academics/Science
Academics and science backgrounds benefits our Board with their technical expertise and advice, along with providing valuable guidance on research trends, and emerging areas of innovation, R&D and engineering trends.
ü
 
 
 
 
 
 
ü
Healthcare Industry
Healthcare industry experience brings a deep understanding of factors affecting our industry, operations, business needs, and strategic goals.
ü
ü
ü
ü
ü
ü
ü
ü
Medical Device Operations
Medical device operations increase the Board’s understanding of our distribution and manufacturing operations
 
 
ü
 
ü
 
ü
ü
International
International exposure yields an understanding of diverse business environments, economic conditions, and cultural perspectives that shapes our global business perspective, strategy and enhances oversight of our multinational operations.
 
ü
ü
 
ü
ü
ü
ü
Diversity
Representation of a range of perspectives expands the Boards understanding of the needs and viewpoints of consumers, employees, healthcare providers, investors and other worldwide.
ü
ü
 
ü
 
ü
 
ü


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OUR BOARD OF DIRECTORS

SKILLS AND QUALIFICATION OF OUR BOARD OF DIRECTORS
The table below illustrates some of the skills, qualifications, background and experience of each member of the Board of Directors. This high level summary is not intended to be an exhaustive list of each of the Board member’s skills or contributions to the Board.    
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Steven J. Barker, M.D., Ph.D.
Board Committees: None
Director since: 2005
Experience and Qualification of Particular Relevance to Masimo:
Dr. Barker’s academic and medical background, as well as his in-depth knowledge of the healthcare industry and hospital operations, academic administration and managed care industry, provide him with a critical perspective regarding Masimo’s products, technologies and prospects. His medical background, including his expertise in anesthesiology, is particularly relevant to Masimo when we evaluate our products and technologies. In addition, Dr. Barker is able to provide us with the unique perspective of a physician.
Career Highlights:
n
Masimo Corporation - (1993 - present)
 
l
Chief Science Officer and Chairman of our Scientific Advisory Board
 
l
Interim Chief Medical Officer
n
University of Arizona - (1995 - present)
 
l
Professor Emeritus of Anesthesiology and Mechanical and Aerospace Engineering at the University of Arizona College of Medicine
 
l
Professor and Head of Anesthesiology, University of Arizona College of Medicine
n
University of California, Irvine - (1990 - 1995)
 
l
Dr. Barker served as Chairman of Anesthesiology at the University of California, Irvine
Business Experience:
 
Education/Professional Background:
l
Physician, Anesthesiology
 
l
B.S. in Physics from Harvey Mudd College
l
Healthcare industry, hospital operations, academic administration, managed care industry
 
l
M.S. and a Ph.D. in Mechanical Engineering from the California Institute of Technology
 
 
 
 
 
l
M.D. from the University of Miami
Current/Past Public Company Boards:
 
Additional Information:
 
l
None
 
l
Previously oral examiner, American Board of Anesthesiology
 
 
 
 
 
l
Section editor for Technology, Computing, and Simulation in the Journal of Anesthesia and Analgesia
 
 
 
 
 
l
Joint appointment as Professor of Mechanical and Aerospace Engineering at the University of Arizona.


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OUR BOARD OF DIRECTORS

MMICHAELCOHENBIOPHOTOV2.JPG
H Michael Cohen
Board Committee: Audit Committee
Director since: 2018
Experience and Qualification of Particular Relevance to Masimo:
Mr. Cohen’s financial background is extremely helpful to the Board and he is an audit committee financial expert under the rules of the SEC. His previous experience in investment banking uniquely qualifies him to serve as Chairperson of the Audit Committee.
Career Highlights:
n
Imbria Pharmaceuticals, Inc. (2019 - present)
 
l
Member of the Board of Directors
n
Paragon Biosciences (2018 - present)
 
l
Member of the Board of Directors
n
Deutsche Bank
 
l
Global Head, Healthcare Investment Banking
 
l
Vice Chairman, Healthcare Investment Banking
n
SG Cowen
n
Union Bank of Switzerland
n
Booz Allen Hamilton
n
Hambrecht & Quist
Business Experience:
 
Education/Professional Background:
l
Healthcare investment banking
 
l
B.A. in Economics from the University of Vermont
 
 
l
M.B.A. from Columbia University.
Current/Past Public Company Boards:
 
Additional Information:
l
None
 
l
Audit Committee Chairperson, financial expertise


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OUR BOARD OF DIRECTORS

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Sanford Fitch
Board Committee: None(1)
Director since: 2006
Experience and Qualification of Particular Relevance to Masimo:
Mr. Fitch’s financial background is extremely helpful to the Board and our Audit Committee. Mr. Fitch brings to us previous experience as a Chief Financial Officer for multiple companies over his long career, and as audit committee chairperson of public companies.

In addition to Mr. Fitch’s prior leadership and management experience working with medical technology companies, Mr. Fitch has considerable financial, auditing, risk management and corporate governance experience and he is an audit committee financial expert under the rules of the SEC, all of which enable him to make valuable contributions to the Board and the Audit Committee.
Career Highlights:
n
Iridex - (2004 - 2019)
 
l
Audit Committee Chairman
 
l
Member of the Compensation Committee
n
Foxhollow Technologies, Inc. - (2004 - 2007)
 
l
Audit Committee Chairman
 
l
Member of the Compensation Committee
n
Conceptus, Inc. - (1994 - 2004)
 
l
Audit Committee Chairman
 
l
Member of the Compensation Committee
 
l
Chief Financial Officer
 
l
Senior Vice President of Operations
n
Chief Financial Officer of several start-up technology companies - (1998 - 2002)
n
Chief Financial Officer of various public technology companies - (1983 - 2002)
Business Experience:
 
Education/Professional Background:
l
Medical device manufacturing
 
l
B.S. Chemistry from Stanford University
 
 
l
M.B.A. from Stanford University
Current Public Company Boards:
 
Additional Information:
l
None
 
l
Financial expertise
















______________
(1) Mr. Fitch’s service on the Audit Committee and as Audit Committee Chairperson ended on March 20, 2020.

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OUR BOARD OF DIRECTORS

SENATORHARKINBIOPHOTO.JPG
Thomas Harkin
Board Committees: Compensation Committee and Nominating, Compliance and Corporate Governance Committee
Director since: 2015
Experience and Qualification of Particular Relevance to Masimo:
Mr. Harkin’s experience in the Senate, and in particular his work on healthcare-related legislation, as well as his extensive understanding of the healthcare system in the U.S., bring a unique perspective and insight to the Board and the Compensation and Nominating, Compliance and Corporate Governance Committees.
Career Highlights:
n
U.S. Senate, Senator from Iowa - (1985 - 2015)
n
U.S. House of Representatives, Congressman from Iowa, 5th District - (1974 - 1984)
n
U.S. Navy - Lieutenant Commander
Business Experience:
 
Education/Professional Background:
l
Healthcare related legislation/government
 
l
B.S. Government and Economics from Iowa State University
 
 
 
 
 
l
J.D. from The Catholic University of America’s Columbus School of Law
Current Public Company Boards:
 
Additional Information:
l
None
 
l
Nominating, Compliance and Corporate Governance Chairman


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OUR BOARD OF DIRECTORS

ADAMMIKKELSONBIOPHOTOV3.JPG
Adam Mikkelson
Board Committees: Audit Committee, Compensation Committee and Nominating, Compliance and Corporate Governance Committee
Director since: 2016
Experience and Qualification of Particular Relevance to Masimo:
Mr. Mikkelson’s investment management experience allows him to provide additional insight to the Board on strategy and business decisions as well as make valuable contributions to the Audit, Compensation and Nominating, Compliance and Corporate Governance Committees. He is also an audit committee financial expert under the rules of the SEC.
Career Highlights:
n
Partner, Camber Capital Management, LLC - (2007 - 2015)
n
Datamonitor, plc
n
Leerink Partners
Business Experience:
 
Education/Professional Background:
l
Healthcare investment management, focusing on therapeutic and medical device sectors
 
l
B.S. Business Administration from Boston University
 
l
Financial expertise
Current Public Company Boards:
 
 
 
 
l
None
 
 
 
 

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OUR BOARD OF DIRECTORS

CRAIGREYNOLDSV31BIOPHOTO.JPG
Craig Reynolds
Board Committees: Compensation Committee and Nominating, Compliance and Corporate Governance Committee
Director since: 2014
Experience and Qualification of Particular Relevance to Masimo:
Mr. Reynolds’ experience with other medical device companies allows him to provide additional insight to the Board on strategy decisions as well as make valuable contributions to the Compensation and Nominating, Compliance and Corporate Governance Committees.
Career Highlights:
n
Ebb Therapeutics - (2011 - 2018)
 
l
Chief Executive Officer
 
l
Member of Board of Directors
n
Symmetry Surgical, Inc. - (2014 - 2016)
 
l
Chairman
n
Vapotherm, Inc. - (2010 - Present)
 
l
Member of Board of Directors
n
Philips-Respironics Home Health Solutions - (2008 - 2010)
 
l
Chief Operating Officer
n
Respironics, Inc. - (1998 - 2008)
 
l
Chief Operating Officer
n
Healthdyne Technologies, Inc. - (1981 - 1998)
 
l
Chief Executive Officer
 
l
Member of Board of Directors
 
l
President of Healthdyne Homecare Division
 
l
President of Healthdyne Cardiovascular Division
 
l
Executive Vice President
Business Experience:
 
Education/Professional Background:
l
Hospital and home healthcare medical device manufacturer
 
l
B.S. Industrial Management from Georgia Institute of Technology
 
 
 
l
M.B.A. from Georgia State University
Current Public Company Boards:
 
Additional Information:
l
Vapotherm, Inc.
 
l
Compensation Committee Chairperson

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OUR BOARD OF DIRECTORS

JULIEASHIMERBIOPHOTO.JPG
Julie A. Shimer, Ph.D.
Board Committees: Audit Committee
Director since: 2019
Experience and Qualification of Particular Relevance to Masimo:
Dr. Shimer’s experience with other medical device companies allows her to provide insight to the Board on strategy decisions, as well as make valuable contributions to the Audit Committee. She is also an audit committee financial expert under the rules of the SEC.
Career Highlights:
n
Welch Allyn, Inc. - (2002 - 2012)
 
l
Chief Executive Officer
 
l
Member of Board of Directors
n
Netgear, Inc. - (2007 - 2019)
 
l
Member of Board of Directors
n
Vocera Communications, Inc. - (2001 - 2007)
 
l
President and Chief Executive Officer
 
l
Member of Board of Directors
n
3Com Corporation, Inc. - (2000 - 2001)
 
l
General Manager
n
Motorola Corporation, Inc. - (1993 - 1999)
 
l
Senior Vice President
Business Experience:
 
Education/Professional Background:
l
International healthcare industry
 
l
B.S. Physics from Rensselaer Polytechnic Institute
l
Medical device manufacturing
 
l
M.S. and Ph.D. Electrical Engineering from Lehigh University
l
Telecommunication/Wireless connectivity
 
l
Financial expertise
Current Public Company Boards:
 
 
 
 
l
Apollo Endosurgery, Inc. - (2018 - present)
 
 
 
l
Avanos Medical, Inc. (formerly known as Halyard Health) - (2014 - present)
 
 
 
l
Windstream Holdings, Inc. - (2017 - present)
 
 
 

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CORPORATE GOVERNANCE AND BOARD MATTERS

CORPORATE GOVERNANCE AND BOARD MATTERS
This section describes key corporate governance guidelines and practices that we have adopted. Complete copies of the charters of the committees of our Board and our Code of Business Conduct and Ethics described below may be viewed on our website at https://investor.masimo.com/governance/governance-documents/default.aspx under “Governance Documents.” Alternatively, you can request a copy of any of these documents free of charge by writing to our Corporate Secretary, c/o Masimo Corporation, 52 Discovery, Irvine, California 92618.
CORPORATE GOVERNANCE PRACTICES
Our Board has adopted corporate governance guidelines to ensure that our Board will have the necessary authority and practices in place to exercise its duties and responsibilities, to review and evaluate our business operations as needed, to make decisions that are independent of our management and to serve the best interests of Masimo and our stockholders. These corporate governance guidelines provide a framework for the conduct of the Board’s business and provide that:
except in unusual circumstances, the positions of Chairman of our Board and CEO will be held by the same person;
ordinarily, directors should not serve on more than five boards of publicly-traded companies, including our Board, and all of our directors currently satisfy this requirement;
outside directors must own a minimum number of shares of our common stock (see “Non-Employee Director Compensation—Non-Employee Director Stock Ownership Policy” on page of this Proxy Statement for additional information); and
a non-employee director will not be nominated for re-election at the next annual meeting of stockholders for which his or her class of directors is up for election following his or her 15th anniversary of service on our Board, unless our Board waives this term limit with respect to such non-employee director as a result of its determination that such nomination is in the best interests of Masimo and its stockholders.
CHARACTERISTICS OF OUR BOARD - (EXCLUDING OUR CEO)
BOARDCHARACTERISTICSV3.JPG

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CONSIDERATION OF DIRECTOR NOMINEES
Director Qualifications
The Board does not prescribe any minimum qualifications for director candidates. The Nominating, Compliance and Corporate Governance Committee may consider a potential director candidate’s experience, areas of expertise and other factors relative to the overall composition of our Board and its committees, including the following characteristics:
the highest ethical standards and integrity and a strong personal reputation;
a background that demonstrates experience and achievement in business, finance, technology, healthcare or other activities relevant to our business and activities;
a willingness to act on and be accountable for Board and, as applicable, committee decisions;
an ability to provide reasoned, informed and thoughtful counsel to management on a range of issues affecting us and our stockholders;
an ability to work effectively and collegially with other individuals;
loyalty and commitment to driving our success and increasing long-term value for our stockholders;
sufficient time to devote to our Board and, as applicable, committee membership and matters; and
meeting the independence requirements imposed by the SEC and Nasdaq.
Diversity of background, including diversity of gender, race, ethnic or national origin, and experience (including in business, finance, government, technology, healthcare or other activities relevant to our business) is also a relevant factor, as a diverse Board is more likely to reflect varying perspectives and a breadth of experience that will positively contribute to robust discussion at Board meetings.
The Nominating, Compliance and Corporate Governance Committee retains the right to modify these criteria from time to time.
Stockholder Nominations and Proxy Access
The Nominating, Compliance and Corporate Governance Committee will consider director candidates recommended by our stockholders. The Nominating, Compliance and Corporate Governance Committee does not intend to alter the manner in which it evaluates candidates based on whether a candidate was recommended by a stockholder or not. Stockholders may nominate directors for election if such stockholders satisfy the advance notice provisions set forth in our Bylaws. To be timely for our 2021 Annual Meeting of Stockholders, stockholders who wish to recommend individuals for consideration by the Nominating, Compliance and Corporate Governance Committee to become nominees for election to the Board at the 2021 Annual Meeting of Stockholders, must do so by delivering a written recommendation to the Nominating, Compliance and Corporate Governance Committee, c/o Masimo Corporation, 52 Discovery, Irvine, California 92618, Attention: Corporate Secretary, no later than the close of business on March 6, 2021, and no earlier than February 4, 2021, unless the meeting date is more than 30 days before or after May 29, 2021, in which case the written recommendation must be received by our Corporate Secretary no later than the close of business on the later of (i) the 90th day before the 2021 Annual Meeting of Stockholders, or (ii) the 10th day following the day on which we first publicly announce the date of the 2021 Annual Meeting of Stockholders.
Each written recommendation must contain the following minimum information:
the name and address of the stockholder and any beneficial owner on whose behalf the nomination is being made;
the class, series and number of shares of Masimo, and any convertible securities of Masimo, that are beneficially owned by the stockholder and any beneficial owner on whose behalf the nomination is being made;
any proxy, contract, arrangement, understanding or relationship pursuant to which the stockholder and any beneficial owner on whose behalf the nomination is being made has the right to vote any of Masimo’s voting securities;

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CORPORATE GOVERNANCE AND BOARD MATTERS

any “short” interest in Masimo’s securities held by the stockholder and any beneficial owner on whose behalf the nomination is being made;
the proposed director candidate’s full legal name, age, business address and residential address;
complete biographical information for the proposed director candidate, including the proposed director candidate’s principal occupation or employment and business experience for at least the previous five years;
a description of the proposed candidate’s qualifications as a director;
the class and number of shares of Masimo that are beneficially owned by the proposed director candidate as of the date of the written recommendation; and
any other information relating to the proposed director candidate that is required to be disclosed in solicitations for proxies for election of directors pursuant to Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Director candidate recommendations from stockholders must include the written consent of each proposed nominee to serve as director if so elected. If a proposed director candidate is recommended by a stockholder in accordance with the procedural requirements discussed above, the Corporate Secretary will provide the foregoing information to the Nominating, Compliance and Corporate Governance Committee.
In October 2019, we amended our Bylaws to permit eligible stockholders to nominate candidates for election to the Board in accordance with procedures providing for proxy access (the “Proxy Access Bylaw”). The Proxy Access Bylaw may be used by an eligible stockholder, or a group of up to 20 eligible stockholders, who has continuously owned at least 3% of the outstanding shares of our common stock for at least the three years before, and including the day of the submission of the proxy access notice, who continues to hold the qualifying minimum number of shares through the date of the applicable annual meeting of stockholders, so long as the eligible stockholder(s) and the director nominee(s) satisfy the requirements specified in the Proxy Access Bylaw. The Proxy Access Bylaw further provides that an eligible stockholder, or a group of eligible stockholders, may nominate up to the greater of (i) 25% of the total number of directors who are members of the Board as of the last day on which a proxy access notice may be submitted, or (ii) two directors, subject to reduction in the event a director has been elected to the Board through proxy access at one of the two immediately preceding annual meetings of our stockholders.
Stockholders who wish to recommend director nominees for inclusion in our proxy materials at the 2021 Annual Meeting of Stockholders in compliance with the Proxy Access Bylaw must do so by delivering a proxy access notice to be received by our Corporate Secretary no earlier than November 21, 2020, and no later than December 21, 2020. In the event that the date of the 2021 Annual Meeting of Stockholders is more than 30 days before or after May 29, 2021, such proxy access notice must be received by the later of (i) 180 days prior to the 2021 Annual Meeting of Stockholders, or (ii) the 10th day following the date that the 2021 Annual Meeting of Stockholders is first publicly announced or disclosed.
Evaluating Nominees for Director
Our Nominating, Compliance and Corporate Governance Committee will consider director candidates that are recommended by members of the committee, other members of our Board, members of management, advisors and our stockholders who submit recommendations in accordance with the requirements set forth above. The Nominating, Compliance and Corporate Governance Committee may also retain a third-party search firm to identify candidates on terms and conditions acceptable to the Nominating, Compliance and Corporate Governance Committee, but has not done so to date. The Nominating, Compliance and Corporate Governance Committee will evaluate all candidates for director using the same approach regardless of who recommended them.
The Nominating, Compliance and Corporate Governance Committee will review candidates for director nominees in the context of the current composition of our Board and committees, the operating requirements of the Company and the long-term interests of our stockholders. In conducting this assessment, the Nominating, Compliance and Corporate Governance Committee may consider the director nominee’s qualifications, diversity, age, skills and such other factors as it deems appropriate given the current needs of the Board, the committees and Masimo, to maintain a balance of

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CORPORATE GOVERNANCE AND BOARD MATTERS

knowledge, experience, diversity and capability. In the case of incumbent directors whose terms of office are set to expire, the Nominating, Compliance and Corporate Governance Committee may review such directors’ overall service to the Board, the committees and Masimo during their term, including the number of meetings attended, level of participation, quality of performance and any other relationships and transactions that might impair such directors’ independence. In the case of new director candidates, the Nominating, Compliance and Corporate Governance Committee will also determine whether the nominee must be independent for Nasdaq purposes, which determination will be based upon applicable Nasdaq listing standards and applicable SEC rules and regulations. Although we do not have a formal diversity policy, when considering diversity in evaluating director nominees, the Nominating, Compliance and Corporate Governance Committee will focus on whether the nominees can contribute varied perspectives, skills, experiences and expertise to the Board. Diversity of background, including diversity of gender, race, ethnic or national origin, and experience (including in business, finance, government, technology, healthcare or other activities relevant to our business) is also a relevant factor in considering nominees to the Board, as a diverse Board is more likely to reflect varying perspectives and a breadth of experience that will positively contribute to robust discussion at Board meetings.
The Nominating, Compliance and Corporate Governance Committee will evaluate each of the director candidates and recommend whether the Board should nominate the proposed director candidate for election by our stockholders.
BOARD LEADERSHIP STRUCTURE
Our Board believes that our CEO is best situated to serve as Chairman because he is the director who is most familiar with our business and industry, possesses detailed and in-depth knowledge of the issues, opportunities and challenges facing us and is therefore best positioned to ensure that the Board’s time and attention are focused on the most critical matters. Our independent directors bring experience, oversight and expertise from outside the Company and industry, while the CEO brings Company-specific experience and expertise. The Board believes that the combined role of Chairman and CEO facilitates information flow between management and the Board, which is essential to effective governance. We have no lead independent director.
BOARD’S ROLE IN RISK OVERSIGHT
Our Board has an active role, as a whole and also at the committee level, in overseeing the management of our risks. The Board regularly reviews information regarding our credit, liquidity and operations, as well as the risks associated with each. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, our entire Board is informed about such risks by the committees.
BOARDOVERSIGHTV2.JPG

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CORPORATE GOVERNANCE AND BOARD MATTERS

INVESTOR FEEDBACK AND ENGAGEMENT
In an effort to foster direct, open and transparent communication with our investors and stockholders, Masimo’s leadership and investor relations team met with analysts and equity holders, as well as potential stockholders, at 13 conferences, seven roadshows and three bus tours during fiscal 2019. In addition, we hosted quarterly earnings calls, and also engaged with investors via phone calls, emails, at other industry events and held an in-house investor day at our corporate headquarters.
We value the feedback from our potential investors and stockholders. During fiscal 2019, members of the Board met with holders of approximately 9% of our outstanding shares. In addition, one or more members of management were involved in more than 9 in-person or telephonic meetings with stockholders representing more than 35% of our outstanding shares. These discussions covered topics such as long-term strategy, financial and operating performance, risk management and governance practices. We found these meetings to be informative, and they helped us shape our compensation programs, Board composition, and other strategic priorities.
SHAREHOLDERENGAGEMENTV414102.JPG

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CORPORATE GOVERNANCE AND BOARD MATTERS

CORPORATE RESPONSIBILITY & SUSTAINABILITY
Under the guidance and supervision of the Board, we pursue the highest standards of corporate responsibility and sustainability, including how we support, protect and empower our employees, how we work with our customers, how we govern the Company and how we connect with our communities.
ENVIRONMENTICONV2.JPG
 
Environment
 
 
 
 
l
We actively seek to decrease our energy consumption through the use of energy efficient fixtures and machinery, occupancy sensors, motion sensors, and automated lighting controls.

 
l
To reduce landfill waste, we recycle returned Masimo products to harness re-useable natural elements and materials to minimize raw material usage.
 
 
 
 
 
 
 
 
 
l
We have installed solar photovoltaic panels on key facilities with sufficient capacity to supply our energy needs for lighting, HVAC, manufacturing needs and electric vehicle charging.
 
l
We have installed electric car charging stations at our headquarters and key facilities.

Minimizing our environmental impact
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Supply Chain
 
 
 
 
l
Suppliers are critical partners in the Masimo value supply chain. We are committed to efforts to prevent forced labor, human slavery and human trafficking where we operate.
 
l
We are committed to further improving our supply chain due diligence processes, driving accountability within the supply chain by leveraging the industry standard Responsible Mineral Initiative - Conflict Mineral Reporting Template and continuing our outreach efforts in order to further develop transparency in our supply chain and mitigate the risk that Masimo’s use of conflict minerals benefits or finances armed groups.
 
 
 
 
 
 
 
 
 
l
Ethical sourcing is an important facet of our ethical conduct strategy. Our suppliers must acknowledge their commitment to our Supplier Code of Conduct.
 
 
Responsibility
 in supply chain
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Workforce/Workplace
 
 
 
 
l
We need great ideas, innovation and leadership to stay current and relevant.
 
l
We are committed to maintaining a safe workplace environment free from discrimination and harassment.
 
 
 
 
 
l
We seek to retain our employees through fair and competitive compensation, benefits and challenging work experiences with increasing levels of responsibility.
 
l
We do not tolerate employment discrimination, based on race, religion, gender, age, marital status, national origin, sexual orientation, citizenship status, disability or other protected characteristics.
 
 
 
 
Building an
innovative and
diverse workforce
 
 
 
 
 
l
More than 48% of our U.S. based workforce are minorities, including over 60% of our senior management team.
 
 
 
 
 
 
 
 




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CORPORATE GOVERNANCE AND BOARD MATTERS

CHARITABLE OUTREACH
Masimo strives to establish itself as the employer of choice for the workers on whom we depend. Throughout our history, we have routinely made contributions to civic, educational, charitable, cultural and other institutions that improve the quality of life and increase the resources of our surrounding communities.
We undertake our philanthropic activities both directly and indirectly through the non-profit organizations we support throughout the globe. We believe in being an active corporate citizen and, among other things, support programs, initiatives and research designed to improve patient safety and outcomes, promote efficient and cost-effective healthcare delivery, and provide advanced healthcare to people worldwide who may not otherwise have access to lifesaving technologies.
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ADOPTION OF PROXY ACCESS
On October 24, 2019, our Board adopted the Proxy Access Bylaw, which permits eligible stockholders to nominate candidates for election to our Board. The Proxy Access Bylaw may be used by an eligible stockholder, or a group of up to 20 eligible stockholders, who has continuously owned at least 3% of the outstanding shares of our common stock for at least the three years before, and including the day of the submission of the proxy access notice, who continues to hold the qualifying minimum number of shares through the date of the applicable annual meeting of stockholders, provided that the eligible stockholder(s) and the director nominee(s) satisfy the requirements specified in the Proxy Access Bylaw. The Proxy Access Bylaw further provides that an eligible stockholder, or a group of eligible stockholders, may nominate up to the greater of (i) 25% of the total number of directors who are members of our Board as of the last day on which a proxy access notice may be submitted, or (ii) two directors, subject to reduction in the event a director has been elected to our Board through proxy access at one of the two immediately preceding annual meetings of our stockholders. See “—Consideration of Director Nominees—Stockholder Nominations” on page 30 of this Proxy Statement for additional information regarding the Proxy Access Bylaw and deadlines for the 2021 Annual Meeting of Stockholders.
MEETINGS AND EXECUTIVE SESSIONS
Our Board meets on a regular basis throughout the year to review significant developments affecting the Company and to act upon matters requiring its approval. Our Board also holds special meetings, as required from time to time, when important matters arise requiring Board action between scheduled meetings. During fiscal 2019, our Board met five times. None of our directors attended fewer than 75% of the total number of meetings held by the Board and the committees (on which and for the period during which the director served) during fiscal 2019.
As required under applicable Nasdaq listing standards, our independent directors periodically meet in executive sessions at which only they are present.

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CORPORATE GOVERNANCE AND BOARD MATTERS

POLICY REGARDING BOARD MEMBER ATTENDANCE AT ANNUAL MEETINGS
It is the policy of our Board to invite directors and nominees for director to attend annual meetings of our stockholders. We held one Annual Meeting of Stockholders in fiscal 2019, which was attended by Mr. Kiani.
INDEPENDENCE OF THE BOARD OF DIRECTORS
Our Board has the responsibility for establishing corporate policies and for the overall performance of the Company, although it is not involved in day-to-day operations. As required under the Nasdaq rules, a majority of the members of our Board must qualify as “independent” as affirmatively determined by our Board. Our Board consults with our counsel to ensure that the Board’s determinations are consistent with all relevant securities and other laws and regulations regarding the definition of “independent” including those set forth in applicable Nasdaq rules. Consistent with these considerations, after review of all relevant transactions or relationships between each director, and the director’s family members and Masimo, our senior management, and our independent registered public accounting firm, our Board has determined that all of our directors other than Mr. Kiani and Dr. Barker are independent, as that term is defined in Nasdaq Listing Rule 5605(a)(2).
CODE OF BUSINESS CONDUCT AND ETHICS
We have adopted a Code of Business Conduct and Ethics that applies to all of our employees, executive officers and directors. The Code of Business Conduct and Ethics is available to stockholders on our website at https://investor.masimo.com/governance/governance-documents/default.aspx under “Governance Documents.” If we make any substantive amendments to our Code of Business Conduct and Ethics or grant any waiver from a provision of the Code of Business Conduct and Ethics to any executive officer or director, we will promptly disclose the nature of the amendment or waiver on our website at https://investor.masimo.com/governance/governance-documents/default.aspx under “Governance Documents” and/or in our public filings with the SEC.
STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Our Board has adopted a formal process by which stockholders may communicate with the Board or any of its directors. Stockholders of Masimo wishing to communicate with our Board or an individual director may send a written communication to the Board or such director, c/o Masimo Corporation, 52 Discovery, Irvine, California 92618, Attention: Compliance Officer. Each communication must set forth:
the name and address of all the Masimo stockholders on whose behalf the communication is sent; and
the number of Masimo shares that are beneficially owned by the stockholders as of the date of the communication.
Each communication will be reviewed by Masimo’s Compliance Officer to determine whether it is appropriate for presentation to the Board or the individual director. Examples of inappropriate communications include junk mail, spam, mass mailings, product complaints, product inquiries, new product suggestions, resumes, job inquiries, surveys, business solicitations and advertisements, as well as unduly hostile, threatening, illegal, unsuitable, frivolous, patently offensive or otherwise inappropriate material. These screening procedures have been approved by a majority of the independent members of our Board. Communications determined by our Compliance Officer to be appropriate for presentation to the Board or such director will be submitted to the Board or the individual director on a periodic basis.

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CORPORATE GOVERNANCE AND BOARD MATTERS

In accordance with our Open Door Policy for Reporting Accounting, Audit, and Other Compliance Concerns, (the “Open Door Policy”), all communications directed to the Board, a committee of the Board or an individual director relating to accounting topics, internal accounting controls, or auditing matters involving the Company are forwarded to our Compliance Officer regardless of the method of communication, and then promptly and directly forwarded by the Compliance Officer to the Audit Committee or the Board, as appropriate. All communications directed to the Board, committee, or individual director that relate to non-financial matters (including, without limitation, purported or suspected violations of any law or regulation, our Code of Business Conduct and Ethics or other policies) will be forwarded to Masimo’s Compliance Officer, and, if the Compliance Officer deems the matter to be a potentially significant violation of law, the Code of Business Conduct and Ethics, or company policy, the Compliance Officer will promptly and directly forward the communication to the Nominating, Compliance and Corporate Governance Committee.
INFORMATION REGARDING BOARD COMMITTEES
Our Board has established a standing Audit Committee, Compensation Committee, and Nominating, Compliance and Corporate Governance Committee to devote attention to specific subjects and to assist it in the discharge of the Board’s responsibilities. All of these committees operate under a written charter adopted by our Board, each of which is available on our website at https://investor.masimo.com/governance/governance-documents/default.aspx under “Governance Documents.” The following table provides committee membership and meeting information for fiscal 2019 for the Audit Committee, Compensation Committee and Nominating, Compliance and Corporate Governance Committee.
 
 
Committee Membership
Name
 
Independent
 
Audit
 
Compensation
 
Nominating, Compliance and
 Corporate Governance
Employee Director:
 
 
 
 
 
 
 
 
 
Joe Kiani
 
 
 
 
Non-Employee Directors:
 
 
 
 
 
 
 
 
 
Steven J. Barker, Ph.D., M.D.(1)(3)
 
 
 
 
H Michael Cohen(4)
 
u
 
¬
CALCULATORA11.JPG
 
 
Sanford Fitch(3)(5)
 
u
 
CALCULATORA11.JPG
 
 
Thomas Harkin
 
u
 
 
ü
 
¬
Adam Mikkelson
 
u
 
ü
CALCULATORA11.JPG
 
ü
 
ü
Craig Reynolds
 
u
 
 
¬
 
ü
Julie A. Shimer, Ph.D.(2)
 
u
 
ü
CALCULATORA11.JPG
 
 
Total meetings in fiscal 2019
 
 
 
5
 
4
 
2
______________
¬
Committee Chairperson.     À    Financial Expert.     ü    Member.    u Independent.    
(1) 
Dr. Barker has provided consulting services to Masimo since July 2013. He currently serves as our Chief Science Officer and Chairman of our Scientific Advisory Board and previously served as our interim Chief Medical Officer from July 2013 to March 2015.
(2) 
Dr. Shimer has been a member of our Board since January 2, 2019. She was appointed to the Audit Committee on March 15, 2019.
(3) 
Dr. Barker’s and Mr. Fitch’s service on the Board will cease when their current terms expire at the Annual Meeting.
(4) 
Mr. Cohen was appointed Audit Committee Chairperson effective March 20, 2020.
(5) 
Mr. Fitch’s service on the Audit Committee and as Audit Committee Chairperson ended on March 20, 2020.

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CORPORATE GOVERNANCE AND BOARD MATTERS

Audit Committee
We maintain a separately-designated Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. Our Board has adopted a written charter of the Audit Committee that is available to stockholders on our website at https://investor.masimo.com/governance/governance-documents/default.aspx under “Governance Documents.”
Our Board has determined that all members of the Audit Committee meet the criteria for independence and financial literacy under Nasdaq Listing Rule 5605(c)(2)(A)(i) and (ii) and Rule 10A-3(b)(1) under the Exchange Act and qualify as financial experts under the applicable Nasdaq and SEC rules.
Both our independent registered public accounting firm and internal financial personnel regularly meet privately with our Audit Committee and have unrestricted access to the Audit Committee.
Members and Number of Meetings
 
Primary Committee Functions
 
 
 
Committee Members:(1)
 
l Appointing, retaining and determining the compensation of our independent registered public accounting firm;
l Overseeing and approving any proposed audit and permissible non-audit services provided by our independent registered public accounting firm;
l Reviewing at least annually the qualifications, performance and independence of our independent registered public accounting firm;
l Overseeing the relationship with our independent registered public accounting firm, including the rotation of the audit partners, as well as reviewing and resolving any disagreements between our management and ensuring discussions with our management and our independent registered public accounting firm relating to internal controls over financial reporting;
l Discussing with our management and our independent registered public accounting firm the design, implementation, adequacy and effectiveness of our internal controls;
l Reviewing and discussing with our management and our independent registered public accounting firm the results of the annual audit and the review of our quarterly financial statements;
l Overseeing and approving the annual Committee Report to be included in our annual public filings;
l Reviewing the quarterly earnings announcements and any other public announcements regarding our results of operations with our management;
l Reviewing and discussing reports from our independent registered public accounting firm relating to our critical accounting policies and practices;
l Establishing and overseeing the processes and procedures for the receipt, retention and treatment of any complaints regarding accounting, internal controls or audit matters, as well as the confidential and anonymous submissions by employees concerning questionable accounting, auditing and internal control matters;
l Investigating any matter brought to its attention, with full access to our books, records, facilities and employees, and with sole authority to select, retain and terminate any consultants, legal counsel or advisors to advise the Audit Committee; and
l Reviewing and evaluating, at least annually, the performance of the Audit Committee and its members, including compliance of the Audit Committee with its charter.
Mr. Cohen, Chairperson
 
 
Mr. Mikkelson
 
Dr. Shimer(2)
 
Mr. Fitch(3)
 
 
 
 
 
Number of Meetings:(4)
 
5
 
 
 
 
 
Attendance Rate:
 
100%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
_____________
 
 
(1)    Our Board has determined that each of Messrs. Cohen and Mikkelson and Dr. Shimer is an audit committee financial expert, as defined under applicable SEC rules, and that Messrs. Cohen and Mikkelson and Dr. Shimer each meet the background and financial sophistication requirements under Nasdaq Listing Rule 5605(c)(2)(A). In making this determination, the Board made a qualitative assessment of Messrs. Cohen’s and Mikkelson’s and Dr. Shimer’s level of knowledge and experience based on a number of factors, including each of their respective formal education and experience.
(2)    Dr. Shimer was appointed to the Audit Committee effective March 15, 2019.
(3)    Mr. Fitch’s service on the Audit Committee and as Audit Committee Chairperson ended on March 20, 2020.
(4)    Typically, the Audit Committee meets at least quarterly and with greater frequency if necessary.

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CORPORATE GOVERNANCE AND BOARD MATTERS

Compensation Committee
Our Board has adopted a written charter for the Compensation Committee that is available to stockholders on our website at https://investor.masimo.com/governance/governance-documents/default.aspx under “Governance Documents.” The charter of the Compensation Committee grants the Compensation Committee full access to all of our books, records, facilities and personnel. The Compensation Committee has the authority, in its sole discretion, to retain and terminate (or obtain the advice of) any advisor to assist it in the performance of its duties, but only after taking into consideration factors relevant to the advisor’s independence specified in Nasdaq Listing Rule 5605(d)(3). The Compensation Committee is directly responsible for the appointment, compensation and oversight of the work of any advisor retained by the Compensation Committee, and has sole authority to approve the advisor’s fees and the other terms and conditions of the advisor’s retention.
Our Board has determined that all members of our Compensation Committee meet the criteria for independence under Nasdaq Listing Rule 5605(a)(2) and Rule 10C-1 of the Exchange Act.
Members and Number of Meetings
 
Primary Committee Functions
 
 
 
Committee Members:
 
l Reviewing and approving our general compensation strategy;
l Establishing annual and long-term performance goals for our executive officers;
l Conducting and reviewing with the Board an annual evaluation of the performance of our CEO and other executive officers;
l Considering the competitiveness of the compensation of our executive officers;
l Reviewing and approving all salaries, bonuses, equity awards, perquisites, post-service arrangements, and other compensation and benefit plans for our CEO and all other executive officers;
l Reviewing and approving the terms of any offer letters, employment agreements, termination agreements or arrangements, change in control agreements and other material agreements between us, on the one hand, and any of our executive officers, on the other;
l Acting as the administering committee of our Board for our executive compensation and cash incentive plans and for any equity incentive plans, including establishing performance metrics, determining bonus payouts and granting equity awards to employees and executive officers;
l Providing oversight for our overall compensation plans and benefit programs;
l Reviewing and approving compensation programs as well as salaries, fees, bonuses and equity awards for the non-employee members of our Board;
l Reviewing and discussing with management, and recommending the annual Compensation Discussion and Analysis disclosure and the related tabular and narrative disclosures regarding named executive officer compensation included in our annual public filings;
l Overseeing and approving the annual Compensation Committee Report included in our annual public filings;
l Overseeing risks and exposures associated with executive compensation programs and arrangements, including incentive plans; and
l Reviewing and evaluating, at least annually, the performance of the Compensation Committee and its members, including compliance of the Compensation Committee with its charter.
Mr. Reynolds, Chairperson
 
Mr. Harkin
 
Mr. Mikkelson
 
 
 
 
 
Number of Meetings:(1)

 
4
 
 
 
 
 
Attendance Rate:
 
100%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
_____________
 
 
(1)    The Compensation Committee meets from time to time during the year.

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CORPORATE GOVERNANCE AND BOARD MATTERS

The Compensation Committee has retained the services of Compensia, Inc. (“Compensia”) to assist the Compensation Committee in assessing and determining competitive compensation packages and to provide input on other executive compensation related matters. Compensia provides no other services to Masimo, and its sole relationship with Masimo is as an advisor to the Compensation Committee.
For more information regarding the Compensation Committee’s engagement of Compensia, see “Executive Compensation—Compensation Discussion and Analysis” starting on page 46.
The Compensation Committee meets outside the presence of all of our executive officers, including the named executive officers, in order to consider appropriate compensation for our CEO. Our CEO may not participate in or be present during any deliberations or determinations of the Compensation Committee regarding his compensation. For all other named executive officers, the Compensation Committee meets outside the presence of all executive officers except our CEO. The specific determinations of the Compensation Committee with respect to executive compensation for fiscal 2019 are described in greater detail in the “Compensation Discussion and Analysis” section of this Proxy Statement.

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CORPORATE GOVERNANCE AND BOARD MATTERS

Nominating, Compliance and Corporate Governance Committee
Our Board has adopted a written charter of the Nominating, Compliance and Corporate Governance Committee that is available to stockholders on our website at https://investor.masimo.com/governance/governance-documents/default.aspx under “Governance Documents.” Our Board has determined that all members of our Nominating, Compliance and Corporate Governance Committee meet the criteria for independence under Nasdaq Listing Rule 5605(a)(2). The Nominating, Compliance and Corporate Governance Committee meets from time to time as it deems appropriate or necessary.
Members and Number of Meetings
 
Primary Committee Functions
 
 
 
Committee Members:
 
l Evaluating the composition, size, organization and governance of our Board and its committees, making recommendations to our Board about the appointment of directors to committees of our Board and recommending the selection of chairs of these committees to the Board;
l Reviewing and recommending to our Board director independence determinations made with respect to continuing and prospective directors;
l Reviewing and recommending to our Board “Section 16 officer” determinations with respect to our executive officers;
l Developing and recommending to our Board policies for considering director nominees for election to the Board;
l Identifying, reviewing, considering and evaluating candidates for election to the Board and recommending to the Board candidates to be nominated for election or incumbent directors to be nominated for re-election at each annual meeting of our stockholders or to fill any vacancies on the Board or any newly-created directorships;
l Overseeing our Board’s performance and annual self-evaluation process and evaluating the participation of members of the Board in continuing education activities in accordance with Nasdaq rules;
l Overseeing corporate governance;
l Overseeing our corporate compliance programs;
l Developing, and updating as necessary, a legal compliance and ethics program designed to evaluate, maintain and correct, when appropriate, our overall compliance with all federal and state rules and regulations and all of our codes of ethics and conduct;
l In consultation with the Audit Committee, reviewing and, if appropriate, updating or recommending to our Board updates to our existing procedures for the receipt, retention and treatment of reports or evidence of violations of any federal or state rules or regulations or of our codes of ethics and conduct; and
l Reviewing and evaluating, at least annually, the performance of the Nominating, Compliance and Corporate Governance Committee and its members, including compliance of the Nominating, Compliance and Corporate Governance Committee with its charter.
Mr. Harkin, Chairperson
 
Mr. Mikkelson
 
Mr. Reynolds
 
 
 
Number of Meetings:(1)

 
2
 
 
 
 
 
Attendance Rate:
 
100%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
__________________
 
 
(1)    The Nominating, Compliance and Corporate Governance Committee meets from time to time during the year.



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CORPORATE GOVERNANCE AND BOARD MATTERS

NON-EMPLOYEE DIRECTOR COMPENSATION
Our non-employee director compensation policy was adopted by the Board, after consultation with the Compensation Committee’s independent compensation consultant and consideration of market data for a group of peer companies (the “Non-Employee Director Compensation Policy”). During fiscal 2019, the Non-Employee Director Compensation Policy provided for the following compensation:
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Compensation Item(s):
 
Annual
Amount
Annual Cash Retainer(1)
 
 
 
Board Service
 
$
70,000

 
Audit Committee
 
12,500

 
Compensation Committee
 
10,000

 
Nominating, Compliance and Corporate Governance Committee
 
5,000

Chairperson Additional Annual Cash Retainer(1)
 
 
 
Audit Committee
 
$
12,500

 
Compensation Committee
 
10,000

 
Nominating, Compliance and Corporate Governance Committee
 
10,000

Equity Awards(2)(3)
 
 
 
Restricted Share Units
 
$
180,000

 
 
 
 
 
______________
(1) 
All annual cash retainers are payable on a quarterly basis in arrears.
(2) 
Each year on the date of our annual meeting of stockholders, each non-employee director is granted an award of restricted share units (“RSUs”) with respect to shares of our common stock having a grant date fair value of $180,000, rounded down to the nearest whole share, which vest on the earlier of the first anniversary of the grant date or the date of the next annual meeting of stockholders.
(3) 
The Non-Employee Director Compensation Policy also provides that all RSU awards granted to the non-employee directors pursuant to the policy will vest in full in the event of a change in control of Masimo.

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CORPORATE GOVERNANCE AND BOARD MATTERS

The following table sets forth summary information concerning compensation paid or accrued for services rendered to us in all capacities to the non-employee members of our Board for the fiscal year ended December 28, 2019.
Fiscal 2019 Non-Employee Director Compensation Table:
 
 
 
 
 
 
 
 
Name(1)
 
Fees Earned
or Paid in Cash
 
Stock
Awards(2)(3)
 
Option
Awards(4)
 
All Other
Compensation
 
Total
Steven J. Barker, Ph.D., M.D.
 
$
70,000

 
$
179,887

 
$

 
$
120,000

(5) 
$
369,887

H Michael Cohen
 
82,500

 
179,887

 

 

 
262,387

Sanford Fitch
 
95,000

 
179,887

 

 

 
274,887

Thomas Harkin
 
95,000

 
179,887

 

 

 
274,887

Adam Mikkelson
 
97,500

 
179,887

 

 

 
277,387

Craig Reynolds
 
95,000

 
179,887

 

 

 
274,887

Julie A. Shimer, Ph.D.(6)
 
79,375

 
179,887

 

 

 
259,262

______________
(1) 
Our Chairman and CEO, Mr. Kiani, is not included in this table as he is an employee of Masimo and therefore receives no compensation for his service as a director. Mr. Kiani’s compensation is included in the “Summary Compensation Table” on page 71 of this Proxy Statement.
(2) 
As of December 28, 2019, each of the listed non-employee directors held RSU awards with respect to 1,304 shares of our common stock, with the exception of H Michael Cohen and Julie A. Shimer, Ph.D., who each held none.

(3) 
These amounts generally represent the aggregate grant date fair value of the RSU awards granted to each listed non-employee director in fiscal 2019, computed in accordance with Financial Accounting Standard Board Accounting Standard Codification Topic 718 (“ASC Topic 718”). These amounts do not represent the actual amounts paid to or realized by the directors during fiscal 2019. The value as of the grant date for the RSU awards is calculated based on the number of RSUs at the grant date market price and is recognized once the requisite service period for the RSUs is satisfied. For a detailed description of the assumptions used for purposes of determining grant date fair value, see Note 18 to our Consolidated Financial Statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Estimates-Share-Based Compensation,” included in our Annual Report on Form 10-K for the year ended December 28, 2019 that was filed with the SEC on February 19, 2020.
(4) 
As of December 28, 2019, each of the listed non-employee directors held the following number of options: Steven J. Barker, Ph.D., M.D.—30,000; H Michael Cohen—0; Sanford Fitch—50,000; Thomas Harkin—0; Adam Mikkelson—0; Craig Reynolds—100,000; and Julie A. Shimer Ph.D.—0.
(5) 
Consists of fees earned by Dr. Barker for non-employee consulting services provided to the Company.
(6) 
Dr. Shimer was appointed to our Board effective January 2, 2019.

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CORPORATE GOVERNANCE AND BOARD MATTERS

Fiscal 2020 Non-Employee Director Compensation Program Changes
Effective January 1, 2020, after consultation with the Compensation Committee’s independent compensation consultant and consideration of market data for a group of peer companies, our Compensation Committee adopted an amendment and restatement of the Non-Employee Director Compensation Policy (the “Amended Director Compensation Policy”). The Amended Director Compensation Policy is generally consistent with the Non-Employee Director Compensation Policy, except that the annual cash retainers for Board committee chairpersons were increased, and the chairpersons of each of the Board committees are no longer eligible to receive an annual cash retainer for general service as a member of the Board committee in addition to receiving the cash retainer for serving as the committee chairperson. The following table shows the differences between the Non-Employee Director Compensation Policy and the Amended Director Compensation Policy:
 
 
 
 
Annual
Amount
Compensation Item(s):
 
2019
 
2020
Annual Cash Retainer(1)
 
 
 
 
 
Board Service
 
$
70,000

 
$
70,000

 
Audit Committee (for 2020, excludes Chairperson)
 
12,500

 
12,500

 
Compensation Committee (for 2020, excludes Chairperson)
 
10,000

 
10,000

 
Nominating, Compliance and Corporate Governance Committee (for 2020, excludes Chairperson)
 
5,000

 
5,000

Committee Chairperson Annual Cash Retainer(1)
 
 
 
 
 
Audit Committee
 
$
12,500

 
$
25,000

 
Compensation Committee
 
10,000

 
20,000

 
Nominating, Compliance and Corporate Governance Committee
 
10,000

 
15,000

Equity Awards(2)(3)
 
 
 
 
 
Restricted Share Units
 
$
180,000

 
$
180,000

_________________
(1) 
All annual cash retainers are payable on a quarterly basis in arrears.
(2) 
Consistent with Non-Employee Director Compensation Policy, under the Amended Director Compensation Policy, each year on the date of our annual meeting of stockholders, each non-employee director will be granted an award of restricted share units (“RSUs”) with respect to shares of our common stock having a grant date fair value of $180,000, rounded down to the nearest whole share, which vest on the earlier of the first anniversary of the grant date or the date of the next annual meeting of stockholders.
(3) 
Consistent with Non-Employee Director Compensation Policy, the Amended Director Compensation Policy also provides that all RSU awards granted to the non-employee directors pursuant to the policy will vest in full in the event of a change in control of Masimo.

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AUDIT RELATED MATTERS

AUDIT RELATED MATTERS
AUDIT COMMITTEE’S PRE-APPROVAL POLICIES AND PROCEDURES
The Audit Committee has adopted a policy for the pre-approval of audit and non-audit services rendered by our independent registered public accounting firm, Grant Thornton LLP. The policy generally pre-approves specified services in the defined categories of audit, audit-related and tax services up to specified amounts. Pre-approval may also be given as part of the Audit Committee’s approval of the scope of the engagement of the independent registered public accounting firm or on an individual explicit case-by-case basis before the independent registered public accounting firm is engaged to provide each service. The pre-approval of services may be delegated to one or more of the Audit Committee’s members, but the decision must be reported to the full Audit Committee at its next scheduled meeting. By the adoption of this policy, the Audit Committee has delegated the authority to pre-approve services to the Chairperson of the Audit Committee, subject to certain limitations.
The Audit Committee has determined that the rendering of the services other than audit services by Grant Thornton LLP is compatible with maintaining the independent registered public accounting firm’s independence.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table represents aggregate fees billed to Masimo for the fiscal years ended December 28, 2019 and December 29, 2018 by Grant Thornton LLP, our independent registered public accounting firm for such periods. All fees described below were approved by the Audit Committee.
 
 
Fiscal Year Ended
 
 
December 28, 2019
 
December 29, 2018
Audit Fees(1)
 
$
1,995,593

 
$
2,111,428

Audit-Related Fees(2)
 
895,015

 
69,839

Tax Fees(3)
 
35,490

 
36,305

All Other Fees(4)
 
26,377

 

Total Fees
 
$
2,952,475

 
$
2,217,572

______________
(1) 
Audit fees consist of fees billed for services rendered for the audit of our consolidated annual financial statements, including performance of the attestation procedures required by Section 404 of the Sarbanes-Oxley Act of 2002, as amended, review of the interim consolidated financial statements included in quarterly reports and services that are normally provided by Grant Thornton LLP in connection with statutory and regulatory filings or engagements.
(2) 
Audit-related fees consist of fees for assurance and related services performed by our independent registered public accounting firm and include fees reasonably related to the performance of the audit of our U.S. retirement savings plan as well as due diligence services in connection with strategic investments and other merger and acquisition-related activities.
(3) 
Tax fees consist of fees related to certain U.S. state and local tax preparation and consultation services.
(4) 
All other fees primarily consist of fees associated with the reimbursement of out-of-pocket expenses related to certain legal matters.


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AUDIT RELATED MATTERS

AUDIT COMMITTEE REPORT
Our Audit Committee is composed of “independent directors,” as determined in accordance with Nasdaq Listing Rule 5605(a)(2) and Rule 10A-3 of the Exchange Act. The Audit Committee operates pursuant to a written charter adopted by the Board, a copy of which may be viewed on our website at https://investor.masimo.com/governance/governance-documents/default.aspx under “Governance Documents.”
As described more fully in its charter, the purpose of the Audit Committee is to assist our Board with its oversight responsibilities regarding the integrity of our financial statements, assessing the independent registered public accounting firm’s qualifications and independence and the performance of the persons performing internal audit duties for us and the independent registered public accounting firm. Management is responsible for the preparation, presentation and integrity of our financial statements as well as our financial reporting process, accounting policies, internal audit function, internal accounting controls and disclosure controls and procedures. The independent registered public accounting firm is responsible for performing an independent audit of our consolidated financial statements in accordance with generally-accepted auditing standards and issuing a report. The Audit Committee’s responsibility is to monitor and oversee these processes. The following is the Audit Committee’s report submitted to the Board for fiscal 2019.
The Audit Committee has:
reviewed and discussed our audited financial statements with management and Grant Thornton LLP, the independent registered public accounting firm;
discussed with Grant Thornton LLP the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC; and
received from Grant Thornton LLP the written disclosures and the letter regarding their communications with the Audit Committee concerning independence as required by the applicable requirements of the Public Company Accounting Oversight Board and discussed Grant Thornton LLP’s independence with them.
In addition, the Audit Committee has met separately with management and with Grant Thornton LLP as part of the committee’s quarterly meetings.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 28, 2019 for filing with the SEC. The Audit Committee also has selected and engaged Grant Thornton LLP as Masimo’s independent registered public accounting firm for the fiscal year ending January 2, 2021, and is seeking ratification of the selection by Masimo’s stockholders.
 
Audit Committee
 
Mr. H Michael Cohen
 
Mr. Sanford Fitch(1)
 
Mr. Adam Mikkelson
 
Dr. Julie A. Shimer
__________________
(1) 
Mr. Fitch’s service on the Audit Committee and as Audit Committee Chairperson ended on March 20, 2020.
This foregoing audit committee report is not “soliciting material,” is not deemed “filed” with the SEC, and shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing of ours under the Securities Act of 1933, as amended, or under the Exchange Act, except to the extent we specifically incorporate this report by reference.

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 EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
The following Compensation Discussion and Analysis may contain statements regarding future individual and Company performance targets and goals. Any targets and goals so disclosed are referenced in the limited context of Masimo’s compensation programs and should not be understood to be statements of management’s expectations or estimates of results or other guidance. Masimo specifically cautions investors not to apply these statements to other contexts.
This Compensation Discussion and Analysis describes the compensation program for our Principal Executive Officer, Principal Financial Officer and the next three most highly-compensated Executive Officers of the Company for fiscal 2019 (our “Named Executive Officers” or “NEOs”). During fiscal 2019, these individuals were:
Name
 
Position(s)
Joe Kiani
 
Chief Executive Officer & Chairman of the Board
Micah Young
 
Executive Vice President, Chief Financial Officer
Bilal Muhsin
 
Chief Operating Officer
Tom McClenahan
 
Executive Vice President, General Counsel & Corporate Secretary
Anand Sampath
 
Executive Vice President, Operations & Clinical Research
This Compensation Discussion and Analysis describes the material elements of our executive compensation program for fiscal 2019. It also provides an overview of our executive compensation philosophy and objectives. Finally, it analyzes how and why the Compensation Committee of our Board (the “Compensation Committee”) arrived at the specific compensation decisions for our executive officers, including our NEOs, for fiscal 2019, including the key factors that the Compensation Committee considered in determining their compensation.
COMPENSATION DISCUSSION & ANALYSIS TABLE OF CONTENTS
 
 
 
 
 
¡
Executive Summary
¡
Compensation Philosophy & Objectives
¡
Governance of Executive Compensation
¡
Individual Compensation Elements
¡
Other Compensation Policies and Practices
¡
Summary Compensation Table
EXECUTIVE SUMMARY
Our compensation programs are designed to attract and retain the most talented employees within our industry and motivate them to perform at the highest level while executing our long-term strategy. In order to retain and motivate this caliber of talent, the Compensation Committee is committed to promoting a performance-based culture. Compensation is tied to financial metrics that incentivize management to successfully deliver on the long-term strategy and our commitments to our stakeholders.

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 EXECUTIVE COMPENSATION

Fiscal 2019 Performance Highlights
The following represent a few financial and operational highlights of fiscal 2019 (these include GAAP and non-GAAP measures1):
A2019PERFORMANCEHIGHLIGHTSV4.JPG
In 2019, we experienced strong momentum in our business. Our global organization continued to execute on our strategy to deliver above-market growth and drive operational efficiencies throughout the business. Our product revenues increased 12.8% to $936.4 million, or 13.6% on a constant currency basis1, and we shipped a record number of noninvasive technology boards and monitors (which exclude handheld and finger oximeters). In addition, we delivered significant operating margin improvements and earnings per share (“EPS”) growth that exceeded expectations.
Our strong performance in 2019 demonstrates the significant progress that we are making to drive operational efficiencies throughout the business in order to achieve our long term goal of 30% operating margins. Most importantly, we are making this progress on the profitability front while at the same time increasing our R&D investment, increasing our strategic investments, improving the growth profile of the overall business and continuing to deliver innovative technologies to the marketplace.
Some of our notable fiscal 2019 financial and operational highlights included the following GAAP and non-GAAP measures1:
REVENUEA01.JPG
l Total revenues, including royalties and other revenue of $937.8 million, which significantly exceeded our original fiscal 2019 financial guidance of $912.0 million.
PRODUCTICON2A01.JPG
l Product revenue increased 12.8% to $936.4 million, or 13.6% on a constant currency basis1, which significantly exceeded our original fiscal 2019 financial guidance of $912.0 million.
SHIPMENTSA01.JPG
l Shipments of noninvasive technology boards and monitors increased 6.3% to 246,200.
PROFITMARGINA01.JPG
l GAAP operating margin was 23.6%.
l Non-GAAP operating margin1 was 24.0%.
EARNINGS2A01.JPG
l GAAP EPS was $3.44.
l Non-GAAP EPS1 was $3.22.
CASHFLOWA1A01.JPG
l Free cash flow was $153.3 million.

____________
1 
Non-GAAP financial measure - please see Appendix A to this Proxy Statement for a description of the adjustments and a reconciliation to the corresponding GAAP financial measure.

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 EXECUTIVE COMPENSATION

Our financial performance in fiscal 2019 continues the strong financial performance that we have delivered over the previous three years, which is highlighted in the following charts ($ in millions, excluding per share amounts)1:
CHART-38D483C558EE5E05AC8A39.JPG CHART-A178ABBD56D6503F98BA39.JPG
________________________
*  
Constant currency growth
**  
Reported growth
A5YEARPERFORMANCEV3.JPG




____________
1 
Constant currency product revenue and non-GAAP EPS are non-GAAP financial measures - please see Appendix A to this Proxy Statement for a description of the adjustments and a reconciliation to the corresponding GAAP financial measure.

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 EXECUTIVE COMPENSATION

Our 2019 Total Stockholder Return (“TSR”) of 47.2% reflects our strong fiscal 2019 financial results, outperforming the median TSR of the Nasdaq Composite and Nasdaq Medical Equipment indices:
CHART-7F0BC848F94C5AB5B5DA39.JPG
Several widely accepted measures of operating performance reflect the strength of our fiscal 2019 financial performance on both an absolute and relative basis, as compared to other companies that comprised our fiscal 2019 compensation peer group, which included other publicly-traded companies classified as health care equipment and supplies companies in Global Industry Classification Standard Code 351010 (see “—Competitive Positioning” on page 60 of this Proxy Statement for a discussion of our fiscal 2019 compensation peer group). Such operating measures for the fiscal years ended nearest to December 28, 2019 were as follows:
Measures of
Operating Performance
 
Masimo
Performance
 
Percentile Ranking
Versus Fiscal 2019 Compensation
Peer Group Companies 
Return on Equity
 
17%
 
86th
Return on Capital
 
17%
 
91st
Return on Assets
 
14%
 
92nd
Total Revenue Growth
 
9%
 
61st
Operating Margin
 
24.0%
 
92nd
We believe that our strong fiscal 2019 performance results reflect the continued attention and focus by our executive team on delivering financial results that reflect not only revenue growth, but also strong financial returns based on our assets, equity, and capital structure. In fact, our fiscal 2019 performance results placed Masimo above the 90th percentile of our compensation peer group for return on capital, return on assets and operating margin, with return on equity at the 86th percentile. We believe that our strong operating performance measures relative to our compensation peer group further demonstrates the success of our executive team’s efforts during fiscal 2019.

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 EXECUTIVE COMPENSATION

Results of Fiscal 2019 Stockholder Advisory Vote
At our 2019 Annual Meeting of Stockholders, we conducted a non-binding stockholder advisory vote on the fiscal 2018 compensation of our named executive officers (commonly known as a “Say-on-Pay” vote). Our stockholders approved our Say-on-Pay proposal with approximately 85% of the votes cast in favor of the fiscal 2018 compensation of our named executive officers. While this represented an increase in support for our executive compensation program compared to our fiscal 2017 compensation program, our Board believes that it remains important to be responsive to feedback from our stockholders about our executive compensation program. During fiscal 2019, management and directors met with investors and stockholders with combined ownership of approximately 35% of the outstanding shares of our common stock and discussed our executive compensation program, long-term strategy and governance practices. These discussions, together with our fiscal 2018 Say-on-Pay results, indicated support for our 2018 compensation program and influenced our decision to maintain a consistent overall approach for fiscal 2019 compensation.
CHART-96CC823D1AE3F6E2989A39.JPG

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 EXECUTIVE COMPENSATION

Fiscal 2019 Executive Compensation Program
As previously noted, the Compensation Committee values the feedback we receive from our stockholders. In 2017, in response to feedback received from our stockholders, the Compensation Committee implemented certain changes to our executive compensation program, which carried forward into fiscal 2018 and 2019, and which continue to align the compensation of our executive officers with both short-term and long-term performance that supports our long-term business strategy.
Annual Cash Incentives - The annual cash incentive plan is designed to provide performance-based compensation that will be earned only upon achieving various pre-established levels of Company financial performance. For fiscal 2019, the Compensation Committee selected 2019 Adjusted Product Revenue2 and 2019 Adjusted Non-GAAP EPS2 as the performance measures for the funding percentages, each weighted equally, as the Compensation Committee believes these performance measures directly support both our short-term strategy and our long-term objective of creating sustainable stockholder value.

Long-Term Incentive (“LTI”) Compensation - Equity Awards - The Compensation Committee believed that a one-year performance period was appropriate for the 2017 PSU awards in light of the transition to our new 2017 Equity Incentive Plan. However, to further align the compensation of our executive officers with long-term performance, the Compensation Committee decided to extend the performance period for the 2018 and 2019 PSU awards from one year to three years. Accordingly, the Compensation Committee granted LTI awards to our executive officers for fiscal 2019 consisting of the following mix of equity awards:
25% in the form of stock options that vest annually over a five year period; and
75% in the form of PSU awards that are earned, if at all, at the end of a three-year performance period based on our actual performance as measured against pre-established performance objectives. For the fiscal 2019 PSU awards, the Compensation Committee selected fiscal 2021 Adjusted Product Revenue2 and fiscal 2021 Adjusted Non-GAAP Operating Margin2 as the performance measures for the targeted PSU award percentages, each weighted equally.
Performance Stock Unit Awards
 
2017
2018
2019
2020
2021
2022
2017 Grant
1-Year Performance Period
Vest(1)
Vest(1)
Vest(1)
Vest(1)
 
2018 Grant
 
3-Year Performance Period
Vest(2)(3)
 
2019 Grant
 
 
3-Year Performance Period
Vest(2)(4)
_______________
(1) 
The 2017 Grant vests annually at 20% per year through 2021.
(2) 
Assumes that at least the threshold performance level is achieved.
(3) 
The 2018 Grant will vest in fiscal 2021 based on actual performance during 2020. If performance objectives are achieved, the PSUs will vest on the date of the approval by the Audit Committee of the audit of our financial statements for fiscal 2020 (or such later date determined by the Compensation Committee).
(4) 
The 2019 Grant will vest in fiscal 2022 based on actual performance during 2021. If performance objectives are achieved, the PSUs will vest on the date of the approval by the Audit Committee of the audit of our financial statements for fiscal 2021 (or such later date determined by the Compensation Committee).
Governance Practices for our Executive Compensation Programs
Our Compensation Committee is committed to ensuring that our executive compensation programs reflect sound compensation principles and compensation-related governance practices. The following actions have been taken by our Compensation Committee with respect to our executive compensation program since 2011:

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 EXECUTIVE COMPENSATION

Effective Date of Response
Fiscal Year
 
Corporate Governance or
 Compensation Practice
`
Issues Previously Raised in Stockholder Outreach or
Corporate Governance Reviews
 
Our Response
 
 
 
 
 
 
 
2019
 
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